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Sources: Egypt Buys Brazilian Corn Cargoes as Corn Demand Rises

Several Brazilian corn cargoes are en route to Egypt as corn demand rises after a brief winter lull, market sources said this week. Demand slowed in December as well as in the first half of January as poultry farms, among others, closed due to elevated running costs associated with heating to counter the cold weather, sources said.

As a result, corn shipments were well below the 700,000 mt that Egypt typically consumes on a monthly basis. This in fact helped trim the excess length in the Egyptian domestic market; through Q3 and Q4, corn was trading US$10-US$20 below cost due to oversupply.

However, with farms beginning to restart, "a lot is expected to arrive over January," one source said, with forecasts at around 800,000 mt. Of this 800,000 mt, around "four to five vessels [are coming] from Brazil," a source said, adding that Egypt also purchased plenty of Ukrainian corn before prices in Ukraine began to firm.

While Brazilian corn is in demand in Egypt, many buyers are in fact switching to it due to a lack of available Argentinian corn, their preferred kernel, sources said. What makes this interesting is that the Brazilian corn export program has usually ended by January.

Regardless, as long as South American corn is available and competitive into Egypt, buyers in Egypt will opt to buy Brazilian or Argentinian origins on quality factors. Given the low tonnage rates due to oversupply in the shipping market, this possibility becomes ever more prominent.

Crucially, this gives Ukrainian sellers a limited window to make further sales given that Argentinian offers are likely to begin in late March. Between January 2018 and January 2019, Egypt imported 9.1 million mt, essentially unchanged from 2017.

In 2018, 2.7 million mt from Argentina (2.9 million mt in 2017), 2.5 million mt from Ukraine (2.6 million mt in 2017), 2.2 million mt from Brazil (3.1 million mt in 2017) and 1.8 million mt from the US (201,000 mt in 2017), according to sources.